The FCA has released its latest consultation paper affecting the Claims Management Industry.
Since taking over the regulation of claims management companies (CMCs), the FCA has published:
'Dear CEO' letters on financial promotions and acting for customers (June 2019) and the importance of carrying out due diligence to ensure the validity of claims (October 2019);
A joint statement with the Information Commissioner's Office (ICO) and the Financial Services Compensation Scheme (FSCS), handling personal data and directing consumers to FSCS (February 2020); and
A portfolio strategy letter, which sets out the potential harms that CMCs could cause along with supervision strategies for dealing with them. This followed a comprehensive analysis of the portfolio.
Its current focus is on preventing phoenixing by Claims management firms. This occurs when an individual connected with a dissolved financial service (FS) firm reappears in connection with a claims management company (CMC). The FCA’s view is that this enables a firm to benefit from the former FS firm’s poor conduct by carrying on claims management activities against it.
Preventing phoenixing will: